Study insurance policies for legally hazardous exclusions

Probe the fine print on terms and conditions of employee benefits plans and other insurance policies covering employees. And if you're shopping around for new coverage, pay attention to provisions or exclusions that could limit coverage for certain groups of employees. As this case shows, not knowing these benefit exclusions can lead to a costly lawsuit.

Recent case: A taxicab company bought a new liability-insurance policy for its drivers. But it didn't realize that a policy provision limited the coverage to only employees from age 23 to 70. The city required all drivers to carry insurance.

The insurer told the taxi company that David Enlow, a 72-year-old driver, wasn't covered. So the company fired Enlow.

Enlow sued, claiming age discrimination. A federal appeals court sided with Enlow and allowed the case to go to trial, saying a jury should decide whether age bias played a role.

While the company didn't intentionally buy the new policy to discriminate against older drivers, the reason for the firing stemmed directly from the driver's age. (Enlow v. Salem-Keizer Yellow Cab Co., No. 02-35881, 9th Cir., 2004)

Final note: If you change policies and learn that members of a protected group would be affected negatively, don't fire them without first talking with your employment attorney. Place the worker on leave until the situation is sorted out. In this case, the insurer's insistence that the company fire an employee because of his age should have been a red flag.